This past July, PepsiCo released its latest Sustainability Report stating that it had made great strides towards its 2025 sustainability agenda entitled Performance with Purpose. While the agenda states three main categories for positive impact – products, planet, people – the press release identifies a fourth goal that may not be as altruistic as you would expect a sustainability agenda to be. PepsiCo’s Chairman and CEO is quoted saying, “Today, it’s more important than ever before to advance sustainability and profitability at the same time, and I’m proud to say that’s what we’ve been doing for more than a decade”.
Profitability. For a company that says it wants to provide more nutritious products, reduce their environmental footprint, and support families, it seems a bit odd to make a point at the beginning of the press release about returning $6.5 billion to its shareholders in 2017. But that is the main purpose of companies, right? They need to make money for their shareholders. Now in some industries that may just be a fact of life. But when it comes to food (the ‘products’ portion of PepsiCo’s agenda), I’m a little uneasy about the idea of money, instead of people’s health, being the company’s priority. What kind of changes are (or are not) made to their products in order to make the company more money? Are these the best decisions for consumers?
The Traffic Light System
Food labels and packaging are one way we can see how the priority to make money leads to certain changes in food products. Packaging of foodstuffs can be designed in many different ways but overall it provides the user with information on the brand and purpose of the food, as well as nutritional details1. In the UK, the packaging and labelling of nutritional information takes place through the traffic light system. This involves using a colour coded system to indicate the relative health of a product based on the amount of fat, saturated fat, salt, sugar, and energy present in the product. The colours range from red to yellow to green, indicating a healthy, moderately healthy, and unhealthy amount of that nutrient, respectively.
This scheme was brought in as a result of a responsibility deal between the government and the food industry in order to tackle obesity and chronic diseases. The main hope was that consumers would change their behaviour, choosing to buy different products that appeared to be healthier (those with more green ‘lights’). If consumers were able to easily identify the healthier products then the labelling system would succeed in helping them choose the best food to improve their overall diet.
To no surprise, the food industry didn’t respond well when proposals for the traffic light system were first introduced in 2006. Companies didn’t like the idea of having to explicitly indicate on the front of their packaging whether a product was healthy or not. Too many red ‘lights’ could prevent consumers from choosing to buy certain products, lowering sales and the associated profits.
This is where the traffic light system presents a second function. In addition to encouraging consumer behaviour changes, the traffic light system also encourages company behaviour changes as they choose to refine their current products to be more healthy2/have more green ‘lights’. If companies have to label their products, they need to present food that is as healthy as possible – not to provide a healthier option for the sake of consumer health but to provide a product that will continue to sell well, making the company money.
Is this right?
So, should we accept that the health of some food is improved because companies want to make a profit? Is it appropriate that money is the incentive to make these improvements? In my ideal world, the answer would be no. Companies in the food industry wouldn’t be motivated by money, but instead motivated by the goal of better health for their customers. Unfortunately, many companies don’t make drastic changes to make their products healthier because eventually they could start to lose money. Due to the higher costs of healthier inputs (eg. replacing artificial dyes with natural colour sources), changes in production costs could be higher than the increase in sales they experience from offering a healthier option.
Now, if profits weren’t the bottom line then maybe some companies would look past this fact and take proactive steps to improve the health of their products…But I don’t believe this will become reality. We live in an economy driven by profit. It’s pretty unlikely that you could convince a company to voluntarily make significantly less money. Therefore, we may have to just take what we can get. So what if achieving a row of green dots on a product doesn’t come from pure intentions? Even if using the traffic light system benefits from the idea that companies will only change their products in the name of profit, shouldn’t we just be glad that changes are happening in the first place?
More information on PepsiCo’s Performance with Purpose: http://www.pepsico.com/live/video/performance-with-purpose_ntvideo